Long Beach council divided over raising taxes to fix budget

LONG BEACH — Reactions on the City Council were mixed Tuesday when members discussed tax-raising options to solve Long Beach's budget troubles.

A report compiled by city staff examined revenue measures that included increasing or changing the utility users tax, bumping the local sales tax, raising the hotel tax, adding a per-parcel property tax and charging an oil barrel sales tax, among other alternatives.

Long Beach voters would need to approve any tax measure proposed by the council.

Three council members — Patrick O'Donnell, Gerrie Schipske and Gary DeLong — were opposed to all potential tax increases.

"I am a little concerned, when we ask for revenue measures, the only thing that is brought back to us is taxes," said Schipske.

Rather than going to citizens for more money, Schipske suggested that the city audit its existing funding sources, review its billing and collections procedures, evaluate overtime use by city employees and examine other efficiencies.

Councilwoman Rae Gabelich, who is termed out of office this year, spoke most strongly for identifying more revenue to pay for services expected by residents.

"No one is begging for a tax, but they sure do want their sidewalks fixed and their trees trimmed and recreation programs open for their children," said Gabelich.

As she has at past meetings, Gabelich pushed for bumping up the utility users tax, which generated $38.8 million last year.

The tax was halved by voters, to 5 percent, following the passage of Measure J in 2000. The change was phased in over a five-year period.

According to city staff's analysis of other California cities, Los Angeles has the highest utility users tax at 10 percent. San Francisco, Oakland and Sacramento levy a 7.5 percent tax on utilities.

Raising Long Beach's utility users tax to the previous 10-percent rate would result in a $12.50 increase if a family's monthly bill was $250, said Gabelich.

"To me, it's the least painful way to go," she said.

The only other council member to speak in support of finding new revenue sources was Councilman Steven Neal.

"No one wants to be taxed, but at the same time, we do have to find ways to provide services that people of this city need," he said.

Council members Suja Lowenthal, Robert Garcia, Dee Andrews and James Johnson spoke little on the options presented by staff.

A general-use tax measure intended for the November ballot would require a unanimous vote of the council and a declaration of an emergency due to state law, said City Attorney Robert Shannon. It could then be approved by a majority of voters. Alternatively, a tax dedicated for a specific purpose would require a majority council vote and approval by two-thirds of voters.

On a city primary ballot, any tax measure needs a majority council approval and a two-thirds affirmative vote of the electorate for a specific purpose, or a majority vote of the people for a general-use tax, Shannon said.

The next city primary election is in April 2014.

Gabelich urged the council to act to give voters a tax measure to decide this year and said it would be irresponsible to wait another two years to attempt to raise revenues while the city faces a three-year, $33.8 million budget deficit.

Mayor Bob Foster called the idea of getting a ballot measure for additional taxes on the November ballot "academic."

"We're never going to get a unanimous vote on this council," said Foster.

He said the city will have to operate with existing resources until there is enough willpower to confront politically-charged subjects such as tax increases.

Tax revenue options

Long Beach city staff laid out the following potential revenue options for the City Council on Tuesday:

- A parcel tax, a fee charged per property parcel, would raise $13.2 million annually at a $50 rate, $26.3 million at $100 and $31.6 million at $120.

- A 1 percent increase to the utility users tax would increase revenue by $7.8 million per year, a 2 percent increase by $15.5 million and a 3 percent increase by $23.3 million.

- A .25 percent increase in the sales tax would result in $14 million in new yearly revenue. A .5 percent increase would net $28 million.

- Adding $50 per business license account would generate $1.5 million annually. The city collected $11.4 million from the business license tax in 2011.

- Every 10 cent increase in the city's oil barrel tax would bring in about $1.3 million. The current tax generates $5.3 million for the general fund and Proposition H.

- Switching to an oil sales tax would require a .38 percent tax to equal current barrel tax revenue. Raising the tax to .5 percent would net $7 million annually and increase by $7 million for each half percent up to 2 percent.

- For every 1 percent raise to the city's transient occupancy tax, $733,000 would be added to the general fund. The city collected $17.6 million from the present 12 percent tax in 2011.

- Levying a 10 percent parking tax on city-owned lots would generate about $1.7 million and not include on-street, metered parking.